Early Edition September 08 2008 at 05:06 AM Chi-Chu Tschang and Harry Maurer
U.S. Government Takes Over Fannie Mae & Freddie Mac
U.S. Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart placed Fannie Mae and Freddie Mac in a government-operated conservatorship on Sept. 7, ousting the firms' chief executives and eliminating their dividends. The Treasury may purchase up to $200 billion of stock in the firms to keep them solvent. The move opens up the option to either split up and sell off the companies or a full nationalization that would cement the government's role in mortgage markets.
European and Asian equity markets rebounded strongly on Sept. 8 to the announcement, led by double-digit gains for mortgage banks as fears about the global implications of a possible default by the twin giants of the U.S. mortgage market faded. Investors had worried failures by Fannie Mae and Freddie Mac, which hold more than $1.5 trillion in assets and almost the same amount of debt, would spark further losses at financial institutions around the world.
Source: Bloomberg, Financial Times
New CEOs at Fannie Mae & Freddie Mac
Along with the U.S. government's intervention in Fannie Mae and Freddie Mac, the two mortgage lenders also came under new leadership on Sept. 7. Herbert Allison, who was named chief executive of Fannie Mae, worked for Merrill Lynch for almost 30 years, rising to the positions of president and chief operating officer. David Moffett, who was appointed chief executive of Freddie Mac, helped transform U.S. Bancorp from a small Ohio bank into the nation's sixth biggest lender.
Source: New York Times
ConocoPhillips signs $8 billion Aussie energy agreement
To fend off an $11 billion hostile bid from Britain's BG Group, Australia's Origin Energy has partnered with U.S. energy major ConocoPhillips to help develop its coal seam gas through a liquefied natural gas project (LNG). ConocoPhillips said in a joint statement with Origin on Sept. 8 that it would invest up to $8 billion for a 50% share of a coal-seam gas to LNG project.
Source: Reuters
Australian banks agree to $15.1 billion takeover
Australia's St. George Bank on Sept. 8 said it had agreed to a sweetened $15.1 billion takeover bid from rival Westpac Banking, paving the way for the creation of the country's biggest bank by market capitalization. While there has been no change to Westpac's offer of 1.31 of its own shares for each St. George share, St. George shareholders will receive dividends totaling up to $1.03 a share -- an improvement of 23 cents a share.
Source: Wall Street Journal
WaMu's CEO forced out
Kerry Killinger, the longtime chief executive of Washington Mutual -- the America's biggest savings and loan -- has been forced out because of the company's mounting losses, according to people briefed on the matter. The departure would end an 18-year run in which he built the bank into one of the country's biggest financial institutions.
Source: New York Times
OPEC expected to keep oil production unchanged
OPEC -- the supplier of 40% of the world's oil -- is expected to keep producing at a near record pace as $106-a-barrel crude squeezes the global economy. According to 29 of 32 energy analysts, the 13-nation Organization of Petroleum Exporting Countries will keep production unchanged at a meeting in Vienna on Sept. 9.
Source: Bloomberg
U.S. advertisers against link-up between Yahoo and Google
The Association of National Advertisers -- a trade association representing many of the biggest consumer advertisers in the U.S. -- on Sept. 7 said it is against a controversial search advertising alliance between Yahoo and Google. The intervention was made in a complaint to U.S. anti-trust regulators and represents the first broad attack on the Internet search alliance.
Source: Financial Times
Travelers to suffer from airline downsizing
The end of this year's U.S. Labor Day holiday marks the beginning of the sharpest downsizing in the airline industry since the 2001 terrorist attacks. Faced with sky-high fuel costs and a weak economy, big airlines are cutting their flight schedules by as much as 14% this fall. For air travelers this will mean higher fares, fewer flight options, and planes that will still seem as crowded as sardine cans.
Source: BusinessWeek
Nasdaq OMX close to launching pan-European trading platform
Trading platform Nasdaq OMX has received a key regulatory approval for its new pan-European stock-trading platform, which is expected to go live sometime in September. Britain's Financial Services Authority has approved Nasdaq OMX's application to operate a system that will trade stocks listed on exchanges across Europe.
Source: Wall Street Journal
Russia tries to control energy markets
Russia aims to corner the energy markets, a senior U.S. official said on Sept. 8. Speaking on condition of anonymity, the official said: "The fact is Russia has worked hard to try to corner the markets, so to speak, and is working to foreclose options to transit for those energy products across Russia."
Source: Reuters
Conversation of the Day: Detroit At The Conventions
Reader Williambanzai7 Writes: "If they convince Washington to go along with this, I will make sure no one in my family and circle of friends ever buys an American car again."
Tell Us: Do U.S. Automakers Deserve $25 Billion in Subsidized Loans?
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